After Republicans shot down a provision that would pay for the costs of the financial regulation reform bill by nominally ending TARP early and applying the savings toward the bill. Apparently the Democrats think that they can use the Republicans’ stance against them. Brian Beutler of TPM writes:
But [Democrats] do now have a new political weapon, if they choose to wield it. Given the choice between ending the bailouts, thereby allowing Wall Street reform to pass, and sustaining TARP in an effort to keep the banks from further regulation, Republicans chose the latter. And soon, most other Republicans will vote down legislation that both imposes stricter rules on Wall Street and lowers the much-loathed TARP legislation into an early grave.
The first thing to note is that the description of the choice facing Republicans doesn’t quite reflect the reality: they weren’t voting against ending TARP, they were voting against a complicated accounting maneuver. The New York Times explained what the provision would entail, and suggested that it would amount to budgetary “wizardry.” But the bottom line would be that it would save $11 billion from TARP to apply to a bill that many Republicans already consider very similar to TARP. That’s not really ending TARP to regulate finance, it’s shifting funding from TARP, which Republicans have long criticized as a potential slush fund, to a bill Republicans hate for its TARP-like qualities.
Stepping back a little bit, the idea that Republicans would vote against effectively ending TARP bailouts, and that Democrats could use that fact as a political tool against them, is a little strange at this stage of the game. Here’s a free hint for the Democratic leadership: they’re not going to be able to message their way to the right of the Republican Party on TARP or bailouts.